Eskom sets stringent demands for Zim

South Africa’s power utility Eskom has set stringent conditions for its Zimbabwean equivalent after agreeing to payment plan for a US$33 million debt owed by Harare and to the subsequent supply of 400MW.

The deal was inked last month to ease the paralysing energy crisis.

Power supplies in Zimbabwe this week slightly improved after Eskom restored supplies to ZESA following weeks of high-level negotiations between the two countries.

Information gathered by Business Times this week shows that Harare has committed to Eskom demands of weekly payments of US$890 000 to service the debt and also undertook to submit weekly reports on this arrangement.

Zimbabwe is also not supposed to slip on payments even by a day as there will be no leniency. If they do slip, South Africa will immediately call in the guarantee. The power supply agreement is backed by a US$15 million guarantee from a regional bank.

Zimbabwe is also not supposed to slip on payments even by a day as there will be no leniency. If they do slip, South Africa will immediately call in the guarantee. The power supply agreement is backed by a US$15 million guarantee from a regional bank.

The hard stance from South Africa come as there had been opposition to the agreement within the neighbouring country’s government as some felt Eskom, which recently reported a billion dollar loss, was constrained.

Last month and before, Zimbabwe experienced daily severe power outages lasting up 18 hours after the country went into arrears on its imports.

Zimbabwe is also set to conclude an agreement with Hidroeléctrica de Cahora Bassa (HCB) of Mozambique which is owed US$47 million next week.

“Negotiations between Eskom and Zesa were not easy given Zimbabwe’s record in servicing debts,” an official familiar with the developments said.

“Zimbabwe has to adhere to several conditions to keep this arrangement active. Eskom has made it clear that it will not hesitate to switch off Zesa if it fails to effect its payments.”

It is also understood that Zimbabwe’s Energy minister Fortune Chasi and other government officials have also begun negotiating with HCB officials to resume power exports to Zimbabwe. Before switching off Zimbabwe, HCB used to supply 50 megawatts which is enough to power a small town.

Last month Business Times established that the country’s largest coal producers had less than a month’s supply of coal as they are struggling to access the diesel required to run their machines. Despite increasing the fuel price several times over the past month, supplies remain erratic across the country with long winding queues becoming the order of the day.

This prompted President Emmerson Mnangagwa to set up an emergency Cabinet team to look into the power crisis. Cabinet also eased duty on solar products as many turned to the alternative source of energy at the peak of the rolling power cuts.

Kariba South Hydroelectric Power Station has been supplying the cheapest electricity in the country at a cost of ZWL$0,02 per kilowatthour (kWh). Thermal power stations Hwange, Bulawayo, Munyati and Harare, produce electricity at a cost of between ZWL$0,08 and ZWL$0,16 per kWh.

Zimbabwe has a daily peak demand of 1800MW but is currently generating less than 1000MW from its five power stations.

Experts say the power crisis throws off track Zimbabwe’s plans to attract foreign investors under the banner, Zimbabwe is open for business. According to the African Development Bank, Zimbabwe needs US$34 billion to upgrade its key infrastructure which includes energy, transport, ICT and water and sanitation.